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5 Stocks Ready to Break Out

DELAFIELD, Wis. ( Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high, or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players that can ultimately push the stock significantly higher.

One example of a successful breakout trade I flagged recently was specialty retailer
Aeropostale (
ARO), which I featured in Sept. 16's "
5 Stocks Ready for Breakouts" at around $8.90 a share. I mentioned in that piece that shares of ARO had recently been downtrending badly from $15.73 to its 52-week low of $7.78 a share. During that trend, shares of ARO were making lower highs and lower lows, which is bearish price action. Shares of ARO were just starting to spike higher off that $7.78 low and it was quickly moving within range of triggering a major breakout trade. That trade was set to hit if ARO managed to clear its gap down day high of $9.55 a share.

Guess what happened? Shares of ARO didn't wait long to trigger that breakout, since the stock broke out above its gap down day high the following day with monster upside volume. Shares of ARO gapped up big to the upside and the stock hit an intraday high of $10.47 a share. That represents a quick gain of 20% for anyone who bought shares of ARO in anticipation of that breakout.

Breakout candidates are something that I
tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.

Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels, and hold above those breakout prices, then it can easily trend significantly higher.